Facebook India revenues jump 43%

Facebook reported a 43% jump in its revenues in India for the year ended March as marketers in the country continue to increase advertising spends on digital media, according to filings with the registrar of companies.

The social network major posted Rs 177 crore in revenues, at Rs 16 per user, for FY16 against Rs 123 crore at Rs 9 per user in the previous year. Its net profit doubled to Rs 31 crore from Rs 16 crore during the period.

India is already the second-largest market for Facebook outside the United States, where it earned Rs 610 per user, and there is a huge potential for growth given the rapid expansion of mobile data usage in the country.

Less developed markets such as India lag behind in consumers’ use of digital devices, and brands have been slower to embrace digital media. Traditional media still secures the bulk of advertising budgets in the country.

But most marketers have increased advertising spends on digital media, particularly in urban areas where the infrastructure supports Wi-Fi and affordable mobile connections, media insiders said. Google attracted most of the spends, they said.

“Facebook is fairly small, but it is usually a number one or two choice for marketers. In terms of broader visibility, it gives enough bang for the buck compared to Twitter or LinkedIn, which are very niche,” said Karthik Srinivasan, national lead at Social@Ogilvy, the social media arm of leading advertising firm Ogilvy & Mather.

An email sent to Facebook did not elicit any response as of press time on Monday. Umang Bedi, managing director at Facebook India & South Asia, had last week told ET, “Indian digital macro-economic growth is driving user adoption. Someday, India is bound to be the largest user market, but I don’t know when.”

New York-based market research company eMarketer estimates that digital media accounted for 12.6% of total ad spend in India in 2015 but will surpass $1 billion or about 14.3% of total ad outlays by 2017.

India’s largest advertiser, Hindustan Unilever, currently spends roughly 10% of its advertising budget on digital media. Marketers said that while Google and Facebook compete aggressively for digital dominance, both are powerful advertising platforms that cater to different needs of a particular business.

“Since, in India, mobile is one of the fastest growing market segments, it gives Facebook a unique edge over Google, as social discovery is more intuitive to mobilefirst,” said Himanshu Bakshi, marketing director at dairy company Danone India. “The trend shows that in the near future, investments in Facebook will be more promising with new features and more effective targeting and engagement opportunities. What better than hearing back immediately on a campaign from consumers,” he said.

Nearly a year ago, Facebook was caught in a debate on net neutrality, with its Free Basics initiative to offer free access to certain internet services in tie-up with local mobile operators seen as violating the principle of free and open internet. Telecom regulator Trai had then forced Reliance Communications — the only Free Basics distributor in the country — to put commercial deployment of the service on hold.

Facebook is now testing Express Wi-Fi, or public Wi-Fi deployments, to offer internet access in rural areas of the country. “We’re working with carriers, internet service providers, and local entrepreneurs to help expand connectivity to underserved locations around the world. We’re currently live in India, and are expanding to other regions soon,” the Express Wi-Fi website says.

Facebook added 28 million new users in the country in the last one year, made the platform available in Hindi, and added 11 more local languages to attract customers. Also, with a majority of Indians still using 2G connections, the company last year came up with a fast-loading, lighter version called Facebook Lite, for which users pay less for data.